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LendingTree (TREE) Q4 Earnings Lag Estimates on High Expenses

Zacks Equity Research

Shares of LendingTree TREE declined 14.2% following the release of its fourth-quarter 2019 results. The company reported adjusted net income per share of $1.12 in the quarter, lagging the Zacks Consensus Estimate of $1.4. Further, the figure comes in lower than the prior-year quarter’s $1.22 per share.

The company’s results were adversely impacted by higher expenses. However, revenues and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) displayed impressive growth.

The company reported GAAP net income of $1.5 million or 10 cents per share compared with the $0.3 million or 2 cents recorded in the year-ago quarter.

For 2019, adjusted net income was $82.4 million or $5.64 per share compared with the $80.3 million or $5.70 per share witnessed in 2018.

Higher Expenses Partially Muted by Revenue Growth

For 2019, total revenues were $1.11 billion, up 44.7% year over year. The revenue figure comes in line with the Zacks Consensus Estimate.

Total revenues jumped 26% year over year to $255.2 million in the final quarter of 2019. This upside primarily stemmed from higher home, consumer and insurance revenues. The reported figure, however, missed the Zacks Consensus Estimate of $262.9 million.

Total costs and expenses came in at $246.2 million, flaring up 23% from the prior-year quarter. This upswing primarily resulted from rise in almost all components of cost.

Adjusted EBITDA totaled $45.9 million, up 16.5% from the $39.4 million reported in the prior-year quarter. Variable marketing margin was $93.8 million, up 19.3% year over year.

As of Dec 31, 2019, cash and cash equivalents were $60.2 million, plummeting nearly 42.7% from Dec 31, 2018. Long-term debt was up 5.4% from the prior-year end to $264.4 million. Total shareholders' equity was $402.3 million, up 16.2% from the Dec 31, 2018 level.

Outlook

Concurrent with the December-end quarter results, management issued first-quarter and full-year 2020 estimates.

First-Quarter 2020

  • Total revenues of $296-$306 million projected.

  • Adjusted EBITDA anticipated in the $43-$46 million band.

  • Variable Marketing Margin projected at $97-$104 million.


Full-Year 2020

  • Total revenues of $1,250-$1,300 million estimated, up 13-17% year over year.

  • Adjusted EBITDA anticipated in the $225-$235 million band, up 14-19% year over year.

  • Variable Marketing Margin projected at $450-$470 million.

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Conclusion

LendingTree put up a decent performance during the October-December period. The company’s expansion strategy for its non-mortgage business seems to be working well. This apart, LendingTree’s commitment to diversify product offerings beyond mortgage-related products augurs well for the long haul.

Nevertheless, escalating expenses remain a concern.

LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. Price, Consensus and EPS Surprise
LendingTree, Inc. Price, Consensus and EPS Surprise

LendingTree, Inc. price-consensus-eps-surprise-chart | LendingTree, Inc. Quote

Currently, LendingTree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

TCF Financial Corporation TCF reported fourth-quarter 2019 adjusted earnings per share of $1.04, beating the Zacks Consensus Estimate. The figure also came in higher than the prior-quarter figure of 98 cents.

BOK Financial BOKF reported a negative earnings surprise of 15.7% in fourth-quarter 2019. Earnings per share of $1.56 lagged the Zacks Consensus Estimate of $1.85. Further, the bottom line compared unfavorably with the prior-year quarter’s $1.65.

Texas Capital Bancshares Inc. TCBI reported adjusted earnings per share of $1.44 in fourth-quarter 2019, missing the Zacks Consensus Estimate of $1.55. However, results compared favorably with the prior-year quarter’s $1.38.

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Texas Capital Bancshares, Inc. (TCBI) : Free Stock Analysis Report
 
BOK Financial Corporation (BOKF) : Free Stock Analysis Report
 
LendingTree, Inc. (TREE) : Free Stock Analysis Report
 
TCF Financial Corporation (TCF) : Free Stock Analysis Report
 
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Zacks Investment Research